Tenants in Common or Joint Tenants: what’s the difference?

Couple sitting in front of caravan while on holiday

So, you’ve done a bit of searching and you’ve found the perfect home to buy together. You both are contributing half the deposit, and you intend to split the loan repayments equally. Your settlement agent asks if you want to own the home as joint tenants or tenants in common. What’s the difference?

If you own the home as joint tenants, you both own 100% of the home together. However, if you own the home as tenants in common, you each own 50% of the home.

Why does this matter, you ask (and it’s a great question)? Well, the major difference between joint tenancy and tenancy in common is the treatment of the property on your death. If you own the property as joint tenants then when one of you dies the other inherits the property automatically under the law.

This may be fine and exactly what you want, particularly if you are married or a de facto couple intending to share your assets for life. However, if your intention going into the purchase is that each of you is able to leave your share of the house to your own family in your Will, which would certainly be the case if you were friends rather than partners, you need to hold the property as tenants in common.

The tenancy question doesn’t often get picked up when you sign the Contract, but your settlement agent will check. Changing a tenancy from joint tenants to tenants in common, or vice versa, is possible, but it can be a faff, particularly if a bank is involved, and there may be additional charges for your bank to produce a consent to lodgement of the amending transfer.

Far better to get it right the first time round!

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Claudia Maw from the collaborative law practice sitting at desk writing notes

Meet Claudia Maw

Since 2011, Claudia has specialised in areas of law that affect rural, regional, and remote communities. She has a unique mix of pragmatism, compassion, broad knowledge, and experience.

Claudia’s online law practice is built on communication and collegiality. Creating a relationship with your family based on trust and empathy is her first priority. And she follows that up with great results. With intricate knowledge of succession planning, deceased estates, commercial and property law, Claudia is a trusted advisor for businesses and families across Western Australia.